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The Evolution of Top Incomes: A Historical and International Perspective

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Thomas Piketty
Emmanuel Saez

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Abstract

This paper summarizes the main findings of the recent studies that have constructed top income and wealth shares series over the century for a number of countries using tax statistics. Most countries experience a dramatic drop in top income shares in the first part of the century due to a precipitous drop in large wealth holdings during the wars and depression shocks. Top income shares do not recover in the immediate post war decades. However, over the last 30 years, top income shares have increased substantially in English speaking countries but not at all in continental Europe countries or Japan. This increase is due to an unprecedented surge in top wage incomes starting in the 1970s and accelerating in the 1990s. As a result, top wage earners have replaced capital income earners at the top of the income distribution in English speaking countries. We discuss the proposed explanations and the main questions that remain open.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11955.

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Date of creation: Jan 2006
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Handle: RePEc:nbr:nberwo:11955

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Find related papers by JEL classification:
D3 - Microeconomics - - Distribution
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Dew-Becker, Ian & Gordon, Robert J, 2005. "Where did the Productivity Growth Go? Inflation Dynamics and the Distribution of Income," CEPR Discussion Papers 5419, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Emmanuel Saez & Michael R. Veall, 2005. "The Evolution of High Incomes in Northern America: Lessons from Canadian Evidence," American Economic Review, American Economic Association, vol. 95(3), pages 831-849, June. [Downloadable!] (restricted)
  3. Dell, Fabien & Piketty, Thomas & Saez, Emmanuel, 2005. "Income and Wealth Concentration in Switzerland Over the 20th Century," CEPR Discussion Papers 5090, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  4. Ian Dew-Becker & Robert J. Gordon, 2005. "Where Did Productivity Growth Go? Inflation Dynamics and the Distribution of Income," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 36(2005-2), pages 67-150. [Downloadable!]
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Facundo Alvaredo, 2007. "The Rich in Argentina over the twentieth century: From the Conservative Republic to the Peronist experience and beyond 1932-2004," PSE Working Papers 2007-02, PSE (Ecole normale supérieure). [Downloadable!]
  2. Bach, Stefan & Corneo, Giacomo & Steiner, Viktor, 2007. "From Bottom to Top: The Entire Distribution of Market Income in Germany, 1992-2001," CEPR Discussion Papers 6251, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Han Kim, E & Morse, Adair & Zingales, Luigi, 2006. "Are Elite Universities Losing their Competitive Edge?," CEPR Discussion Papers 5700, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  4. Steven N. Kaplan & Joshua Rauh, 2007. "Wall Street and Main Street: What Contributes to the Rise in the Highest Incomes?," NBER Working Papers 13270, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Ryo Kambayashi & Daiji Kawaguchi & Izumi Yokoyama, 2006. "Wage Distribution in Japan: 1989-2003," Hi-Stat Discussion Paper Series d06-183, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  6. Xavier Gabaix & Augustin Landier, 2006. "Why Has CEO Pay Increased So Much?," NBER Working Papers 12365, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Roine, Jesper & Waldenström, Daniel, 2006. "The Evolution of Top Incomes in an Egalitarian Society: Sweden, 1903–2004," Working Paper Series in Economics and Finance 625, Stockholm School of Economics. [Downloadable!]
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  8. Thomas Lemieux, 2008. "The changing nature of wage inequality," Journal of Population Economics, Springer, vol. 21(1), pages 21-48, January. [Downloadable!] (restricted)
    Other versions:
  9. Roine, Jesper & Vlachos, Jonas & Waldenström, Daniel, 2007. "What Determines Top Income Shares? Evidence from the Twentieth Century," Research Papers in Economics 2007:17, Stockholm University, Department of Economics. [Downloadable!]
    Other versions:
  10. Guillermina Jasso & Eva M. Meyersson Milgrom, 2007. "Distributive Justice and CEO Compensation," IZA Discussion Papers 3236, Institute for the Study of Labor (IZA). [Downloadable!]
  11. E. Han Kim & Adair Morse & Luigi Zingales, 2006. "Are Elite Universities Losing Their Competitive Edge?," NBER Working Papers 12245, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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